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TMI Blog2010 (2) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, the bagasse is generated by the sugar factories and the same is made in form of large cubical compressed and dried blocks. After collecting the bagasse blocks by the assessee, the same are crushed and converted into powder form, then it is fed through conveyer to the press unit, which recompress it and passes the material to a feeder box and then the material is forced by the machine through a tapered dye to result the small sized high caloric briquettes for fuel purposes. Assessee claimed that it is engaged in the business of collecting and processing or treating the bagasse which is biological waste or bio-degradable waste into briquettes for fuel and therefore, he is entitled for deduction under s. 80JJA of the IT Act for both assessment years under consideration. 3. During the assessment proceedings, the AO examined the provisions of s. 80JJA and relevant Circular No. 772, dt. 23rd Dec., 1998 [(1999) 151 CTR (St) 9] and another Circular No. 779, dt. 14th Sept., 1999 [(1999) 156 CTR (St) 17] issued by the CBDT for the proposition that waste referred in the said section relates to municipal waste generated within the municipal limits only and not the waste gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ste. Since the bagasse is not a waste and only a residual product and is a saleable product, the benefits of s. 80JJA are not available though the bagasse is bio-degradable. Further, he linked that the genesis of the provisions of s. 80JJA to the report submitted by the committee at the instance of the Supreme Court and mentioned that it is intended for only in connection with the municipal waste, which is bio-degradable only. Regarding the processing or treatment, the AO is of the opinion that the bagasse before the processing and after processing remains the same, both for the size of the briquettes. 5. In response to the show-cause notice dt. 17th Feb., 2006, assessee made the submissions and the summary of the same is given in the assessment order on pp. 12 and 13 which is reproduced as under:- "(a) That bagasse is a waste of sugar factories and not a bye-product of sugar factories as it is not deliberately produced by the sugar factories. It has been stated that since the word waste has not been defined under IT Act, the said word has to be accepted in common parlance. Whether a substance is a waste or not has to be seen with reference to the person who generat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as fuel it is a saleable product for consideration. In view of the very potential use of the bagasse for fuel purpose the same cannot be termed as waste. The other uses of the bagasse include the use in manufacturing of paper book, hardboards, files etc. In connection with the assessee's reliance on Excise Department Tariff Schedule, the said classification is not sacrosanct. Further, the assessee's reliance on Circular No. 779 is also rejected by the AO as words 'any location' mentioned therein refer to availability of deduction to the units irrespective of the location of the units and not with reference to the 'place of generation of waste'. Regarding the assessee's contention that the collection includes the situation of the collecting bio-degradable waste for price, the AO is of the view that the collection is only with reference to the 'business of collecting' without involving purchase of bagasse for price. Therefore, both the words business and collection assume importance. As per the Municipal Management Rules, 2000, the word collection has been defined to mean the lifting and removal of solid waste from collection points or any other locations' [r. 3(v)]. AO relied on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee submitted that there is no need for supply of words in the statute i.e., s. 80JJA as they are self-explanatory and mentioned there is no use of the word 'purchase' or 'municipal limits' qualifying the expression 'bio-degradable waste' in the statute and thus, questioned the AO's contention that it is restricted to bio-degradable municipal waste only located within the boundaries of the municipal limits and not for rural bio-degradable waste. Assessee relied on various definitions to demonstrate that the bagasse is a waste for the sugar industries and also the Government of Maharashtra for levy of excise duty and he also relied on the letter from the authorities of Government for the proposition that the bagasse is a waste. 9. CIT(A) discussed the provisions of s. 80JJA as well as the said circular and other material relied by the AO as well as the assessee's submissions and gave a finding that the bagasse is a bio-degradable waste. Para 3.16 of the impugned order is relevant in this regard. CIT(A) is of the opinion that the AO cannot rely on the resolution passed by the municipal corporation in the light of the report submitted at the behest of the Supreme Court on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts at category (i) above, Revenue is before us. Aggrieved with the confirmation/denial of deduction in respect of job works receipts at (ii) above, the assessee filed the cross-objections for both years i.e., asst. yrs. 2003-04 and 2004-05. 12. We shall now undertake appeal-wise adjudication in the following paras. Revenue's appeal for the asst. yr. 2003-04 is made use of as a lead order as the order of the AO is more speaking one. ITA No. 1076/Pn/2007-Asst yr. : 2003-04-Revenue's appeal:- 13. The grounds raised by the Revenue are reproduced as under:- "1. On the facts and in the circumstances of the case, the learned CIT(A) erred in allowing the deduction under s. 80JJA in respect of business of making fuel briquettes from bagasse." 14. During the proceedings before the Tribunal, in connection with the above ground, Mr. Amarendra Kumar senior Authorised Representative for the Revenue argued stating that the order passed by the AO is a speaking order and he heavily relied on the same. Further, learned Departmental Representative brought to our attention the provisions of s. 80JJA of the Act and engaged in demonstrating that the 'business of collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generation. Relying on pp. 29 to 32, the counsel stated that "in the natural world, there is no such thing as waste and it is also mentioned that green waste emanating from sugar industries waste". Referring to word 'collecting' in s. 80JJA, the counsel borrowed the meaning of the said word from the Oxford Dictionary, 3rd edition and stated that it means,- "1. to gather together into one place or group; to gather in (money, debts, etc.); to make a collection of (specimens, curiosities, etc.) 2. To assemble, accumulate. 3. To regain control over (one's thoughts, feelings, or energies); to summon up (courage, etc.) 4. To form a conclusion, draw an inference." 16. We have heard both the parties and perused the orders of the Revenue as well as the paper book filed before us. Before going to adjudicate the appeals on hand, we find it necessary to analyze the relevant provisions in this regard. To start with, we proceed to analyse the provisions of s. 80JJA and section reads as follows:- "80JJA. Where the gross total income of an assessee includes any profits and gains derived from the business of collecting and processing or treating of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that the said section is created for attending to the problems of the planners of the local bodies in the general environment of the 'increasing population and urbanization'. While the urbanization refers to change of rural areas in the towns and cities, the population problem is uniform in all parts of the country. Further, the 'local bodies' refer to Panchayats as referred to in cl. (d) of Art. 243 of the Constitution, municipalities as referred to in cl. (e) of Art. 243P of the Constitution, cantonment boards as defined in s. 3 of the Cantonments Act, 1924 etc. As such the expression 'local authorities' is defined in the Act for the limited purpose of said clause vide Explanation to s. 10(20) of the Act. The said Explanation does not imply the expression 'waste' the one which is freely available. In fact, it explains that the waste is substrate or raw material for many other useful activities, when recycled. We have also considered the source material relied upon by the assessee's counsel and find that the bagasse is a waste for the persons of sugar industry and it is undoubtedly an organic and bio-degradable product. 20. We have so far considered the relevant pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, there are no provisions in the statute that the waste must be collected only when the same is available free of cost. So long as the assessee fulfils the twin conditions of collecting and processing the biodegradable waste, he is entitled to these beneficial provisions of s. 80JJA of the Act. Regarding the objection relating to the end-product after processing is one and the same as the waste collected, we do not agree with said objection as there is great amount of change in terms of caloric value of the briquettes before and after the said processing or treatment. As such, the requirement of the 'treatment' is met once a particular substrate i.e., bagasse is subject to certain procedures i.e., washing or cleaning or addition of chemicals etc., whereas in the instant case the bagasse is subjected to various stages as described in the opening paras of this order. 22. Considering the above, we are of the opinion that the assessee is entitled to benefits of s. 80JJA in respect of the profits and gains derived from the business of collecting and processing or treating of the bio-degradable waste. Therefore, the order of the CIT(A) does not call for interference in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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